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This is an informal case summary prepared for the purposes of facilitating exchange during the 2024 WIPO IP Judges Forum.

Session 2: Standard Essential Patents

Court of Appeal of England and Wales (Civil Division), United Kingdom [2024]: InterDigital Technology Corporation and Ors v Lenovo Group Ltd. and Ors, [2024] EWCA Civ 743

Date of judgment: July 12, 2024

Issuing authority: Court of Appeal of England and Wales (Civil Division)

Level of the issuing authority: Appellate Instance

Type of procedure: Judicial (Civil)

Subject matter: Patents (Inventions)

Plaintiff: InterDigital Technology Corporation and others

Defendant: Lenovo Group Limited and others

Keywords: FRAND, Standard Essential Patent (SEP), FRAND rate setting, Limitation periods, Interest, Comparables, Comparables subject to non-FRAND effects

Basic facts: InterDigital owned a portfolio of telecoms SEPs.  It successfully sued Lenovo for infringement.  Lenovo ultimately agreed to take a licence on FRAND terms pursuant to the European Telecommunications Standards Institute (ETSI) Intellectual Property Rights (IPR) policy.

At first instance, Mellor J considered what FRAND royalties to award and, on the basis of comparables, set a lump sum based on $0.24 per unit.  He rejected a top-down cross-check.  He decided that the FRAND rates should not take any account of limitation periods (Lenovo’s sales had been going on since before the relevant limitation date in many territories) and that Lenovo should pay interest on all sales.

InterDigital appealed, seeking to increase the rate.  Lenovo appealed on the points about limitation and interest.

Held: The Court of Appeal increased the rate slightly.  It upheld the first-instance judge on the limitation and interest points.

Relevant holdings in relation to standard essential patents: The Court of Appeal confirmed that comparables were the most reliable way to set FRAND rates and agreed with the first-instance judge that the top-down cross-check should be rejected if inconsistent with the comparables approach.

However, the Court of Appeal changed the rate imposed by the first-instance judge, because he had used a comparable that was affected by a non-FRAND factor/behavior (hold out) on the part of the licensee of the comparable license.  The comparable ought to have been adjusted upwards to take account of the non-FRAND factor.  The Court adjusted the rate to $0.30.

In relation to limitation periods, the Court of Appeal said that willing licensors and licensees of SEPs ought to agree a FRAND license soon after the licensee started to use the technology.  It was inconsistent with those obligations to enforce limitation periods.  Enforcing limitation periods would discriminate against licensees who started paying promptly and in favor of licensees who started paying later (whether or not as the result of deliberate delay).

In relation to interest, the Court of Appeal held that the power to award it arose from the fact that the Court was setting a rate based on what willing parties would pay under the ETSI IPR policy.  The overriding consideration was the widely accepted principle that the timing of payment should be economically neutral.  The Court held that the policy reasons for imposing interest were the same as for the limitation period issue.  Conduct could potentially be relevant to reducing the amount of interest, but not in the circumstances of the case.

In general, the Court gave no material weight to the parties’ conduct given, in the case of Lenovo, that it had committed to take the license that the Court settled.

Relevant legislation: None.  The decision was based on case law and the ETSI IPR policy.